The Project for Excellence in Journalism has released this year's annual State of the News Media report. While much of the blog talk has been about the report's conclusion that user-generated content now drives news consumption (Duh!

-- BlogHer CE Erin Kotecki-Vest could have told you that!), this section of the massive online tome drew my attention:

For the first time, in 2007, the Project was able to examine whether the public agreed or disagreed with the media over what constituted important news. Each week, the News Interest Index survey by the Pew Research Center for the People & the Press asked news consumers to describe their level of interest in the top stories as identified in the News Coverage Index. Several clear areas of disconnect emerged.

In the week of May 20-25, with the average price of gasoline spiking to $3.22 a gallon, 52% of those surveyed in the News Interest Index said they were following that issue very closely, the highest level of public interest for any story in 2007. Yet, at 4% of the newshole, the rising costs at the pump were only the sixth-biggest story of that week in the News Coverage Index. That represented the biggest disparity of the year in these two metrics between editors and the public, and it was a basic pocketbook issue, the cost of filling a gas tank.

Looking at stories that the public said they were most closely following, significant interest gaps emerged for several other news events — revelations that the dangerous staph “superbug” called MRSA was more common than previously thought, recalls of pet food, the troubled U.S. economy in the week that investor guru Warren Buffett said taxes on the rich were too low, and President Bush’s veto of the legislation intended to expand health insurance for children.

As was the case with many of the topic areas that got little coverage in the press, the common characteristic that defines these particular stories, including the spike at the gas pump, is that they speak to the nuts and bolts of daily existence, such as health and money. (See this section for more)

Conversely, there were some subjects that the media seemed far more interested in covering than the public said they were interested in following. These might be the stories that the media “over-delivered” in the year. A number of those stories involved events overseas. President Pervez Musharraf’s decision to declare a state of emergency in Pakistan, the Mideast peace summit meeting, the agreement by North Korea to abandon its nuclear weapons program and the Lebanese Army’s battle with Islamic militants were all stories that generated more media attention than public interest.

Those results apparently reflect the public’s lack of interest in stories that, in fact, are getting only minimal coverage. So even as journalists seem to have little inclination to cover global events other than Iraq, news consumers still think they’re being oversaturated. There may be a chicken-and-egg effect here. If Americans really aren’t interested in global conflicts, the press has even less incentive to spend time and money on those stories.

But here's the thing. The war is a pocketbook issue. So is the stability of the Middle East -- not only when it comes to gas prices, but to the price of food (trucks need gas), and so many other bread and butter aspects of our lives. Of course, one might have thought that 4,000 dead American servicepeople was justification enough for heavy coverage.

What can journalists do to make the connection clearer?

The answer may be critical to the future of the industry. There is widespread panic in the news business already because the advent of such competitors as Craigslist.org and the proliferation of social media sites have undone the traditional business model of using advertising to support news production:

What was once a matter of big media companies handing out content when and where it was most advantageous has morphed into a lengthy menu of à la carte options, with consumers deciding when, where and how they see, hear or read their selections.

For users of media, this opening of the floodgates may well create information and entertainment nirvana. But, for advertisers, what was once the fairly easy job of planning and buying across a handful of options has turned into a Rubik’s Cube of twisting and turning possibilities.

Consumers are in control. It's about delivering content to us, not delivering our eyeballs to advertisers.

By the way, the report is full of interesting tidbits and trends -- some of which may be surprising. For example, want to guess who the most popular broadcast journalist is on TV? Katie Couric -- just ahead of Bill O'Reilly.

When all is said and done, I'm concerned about the fragmentation of audiences because we need a spaces where people communicate across lines of difference. That's part of the reason that I value BlogHer. So much of the report documents this fragmentation -- by ideology, age, ethnicity. I think there's still a role for journalism that hews to traditional values of truth-telling, independence and fairness. Perhaps if journalists can devote more attention to ensuring that we demonstrate the impact of the news we report on the lives of our readers, we'll earn their attention in return.